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Russia and Saudi Arabia have reaffirmed their commitment—and that of the OPEC+ group—to increase crude oil production by 1 million bpd, Bloomberg reports, citing a joint announcement by Energy Ministers Alexander Novak and Khalid al-Falih.
The announcement comes amid increasing U.S. pressure on Iranian oil importers and rising prices on doubts that the cartel will be able to cover any losses resulting from the coming into force of U.S. sanctions against Tehran in November.
Yet the Novak and Al-Falih announcement also marks a departure from earlier comments from the Saudi minister who said last month that the 1-million-bpd is only a nominal figure and the actual production increase will in fact be lower than that. What prompted the minister to make this remark was probably traders’ worry that the market will once again be flooded with oil.
Since the June 22 OPEC meeting, however, energy newsfeeds have been dominated by the U.S. pressure on allies to cut Iranian imports to zero by November 4 and by the surprising turn of events in Libya, where the LNA handed control of the Oil Crescent ports to the eastern-affiliated NOC, leading to the suspension of most oil production.
Related: What Trump’s Tweet Actually Means For Oil
The Libyan shortfall currently stands at about 850,000 bpd, as estimated by the western-based, UN-recognized, NOC. On the other hand, Reuters production data suggests Saudi Arabia alone had increase its oil production by about 700,000 bpd since May. The Kingdom has said it could raise production further, but analysts are skeptical it could do it quickly enough—or increase it to a level high enough—to prevent a further price rise as the Iranian sanction wind-down approaches.
Meanwhile, Washington has reiterated its tough stance on Iran, although a senior official suggested that the State Department is “prepared to work with countries that are reducing their imports on a case-by-case basis.”
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.